Strong results at Gleeson

THE preliminary year-end results from MJ Gleeson show strong growth in profit and turnover, despite a drop in contracting margins and problems on a number of design-and-build contracts.

Group turnover rose 17.3% to £349.6m in the year ended 30 June and pre-tax profit jumped 20.5% to £16.1m. The share price rose 14% to 792.5p.

However, finance director Colin McLellan conceded that margins on the group's £241.1m building and engineering turnover had dipped 0.1% to 1.4%. "They're going in the wrong direction and we'd like to think they can get better," he said.

He said Gleeson was negotiating claims on design-and-build contracts, but declined to name them. He said: "It's a form of tendering we'll deal with much more carefully in the future." McLellan said that 80% of Gleeson's £550m forward order book was based on partnering or PFI contracts.

Gleeson has started construction of a £45m PFI unit at St George's Hospital, Tooting, south London, and is preferred bidder on a £19m schools package in the Scottish Highlands.

Gleeson Homes increased turnover 8.2% to £107.0m, selling a record 720 homes at an average price of £124 600. Profit rose 18.0% to £8.2m.

McLellan said he was relaxed about the 3.6% block of Gleeson shares recently acquired by contractor YJL. He said: "It has told us it is just making an investment, and it has done very well out of it. The share price has appreciated dramatically."